Orange’s Polish Unit Soars Most in 14 Years on Dividend Proposal

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Orange Polska SA jumped the most in 14 years after Poland’s biggest phone company proposed to keep its dividend unchanged even as it plans investment into high-speed mobile Internet services.

The shares rose as much as 11.1 percent, the strongest intraday gain since 2001, and closed 10.7 percent higher to 9.4 zloty in Warsaw. On Thursday, the unit of France’s Orange SA proposed to pay out 0.50 zloty a share for a third consecutive year and reported a surprise profit for the fourth quarter.

The country’s former monopoly, whose revenue has shrunk every year since 2007, was under pressure to cut dividend to help finance investments, brokerages including Raiffeisen Centrobank AG, BESI Grupo Novo Banco and Equilor Befektetesi Zrt. said in notes last week. Orange is bidding for frequencies to expand long-term evolution technology, known as LTE, in an auction that may bring Poland as much as $1 billion this year.

“We expect a positive reaction after the dividend announcement,” Ondrej Cabejsek, an analyst at Wood & Co. in Prague, said in a note on Friday. “We are somewhat surprised the company announced a full dividend during the ongoing LTE auction. We highlighted the risk of a dividend cut should the auction turn out to be costly.”

LTE Frequencies

Poland is selling 19 blocks in the 800- and 2,600 megahertz bands, seeking to raise at least 1.6 billion zloty ($438 million) at the auction that started on Feb. 10. Six bidders, also including Deutsche Telekom AG and Cyfrowy Polsat SA, may spend as much as 3.6 billion zloty on the frequencies, Raiffeisen and BESI said.

The auction will allow Orange, which now uses Deutsche Telekom AG’s spectrum to provide high-speed Internet services, to catch up with its competitors on central Europe’s largest market. The operator may spend 1.4 billion zloty on LTE frequencies, Konrad Ksiezopolski, a Warsaw-based analyst at BESI, said in a note on Friday.

After four days of the auction, bids totaled 1.75 billion zloty, with the highest offer for the 800 megahertz frequency reaching 279 million zloty, according to the telecommunication watchdog’s website. The sale will be completed in the first half of this year “or in the summer months,” Dawid Piekarz, a spokesman for the regulator, said on Feb. 9.

Orange Polska had net income of 30 million zloty in the fourth quarter, while the mean estimate in a Bloomberg survey of analysts called for a loss of 24.6 million zloty. Its organic cash flows may be 900 million zloty this year as it also plans to invest 450 million zloty in a high-speed fiber network, it said in a regulatory filing late on Thursday.